Munich Re Group Annual Report 2006 (PDF, 1.8

Munich Re Group Annual Report 2006
Overview and key figures
Outstanding consolidated result of €3.5bn
Return on risk-adjusted capital (RORAC) of 20.3% after tax
Planned dividend increase to €4.50 per share
The Munich Re Group’s business performed very well in
the past year. With an outstanding consolidated result of
€3.5bn, we clearly surpassed our expectation of €2.6-2.8bn
in 2006, making it the third record year in succession. Our
return on risk-adjusted capital (RORAC) amounted to
20.3% after tax, thus markedly exceeding our long-term
target of 15%. This was due to the very good results of our
primary insurers and reinsurers, which were successful
both in their underwriting business and in the investment
of their managed assets.
Compared with the previous year, reinsurance experienced
significantly fewer large losses in 2006. With an
attractive environment in many areas, we were able to
maintain and – where necessary – even improve the terms
and conditions of our basic business. This helped us to
achieve a combined ratio that was well within our target of
97%. At 92.6%, it is the most satisfactory of recent years. In
the property-casualty segment, business experience was
thus very positive. The life and health segment achieved a
good result, albeit not as high as the previous years’ figure,
which had benefited from special factors. Thanks partly to
the contribution from investments, we achieved an excellent
overall operating result in reinsurance, where total
premium volume remained more or less steady as a consequence
of our strictly risk-adequate underwriting policy.
In primary insurance, too, our annual result of €1,062m
was well above our target, which we had set at €600–700m.
Gross premiums written fell, but still exceeded our expectations
of €16.5–17bn. The reduction is solely due to our
sale of the Karlsruher Insurance Group and the Dutch
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Management report_Overview and key figures
2006 2005 2004 2003 2002
Gross premiums written
Combined ratio
€bn 37.4 38.2 38.1 40.4 40.0
– Reinsurance property-casualty % 92.6 111.7 98.9 96.5 123.7
– Primary insurance property-casualty % 90.8 93.1 93.0 96.4 99.9
Consolidated result €m 3,536 2,751 * 1,887 –468 214
* Adjusted owing to first-time application of IAS 19 (rev. 2004).
Nieuwe Hollandse Lloyd Verzekeringsgroep (NHL) in 2005.
We were unable to fully compensate for the lower premium
income in life insurance with growth in propertycasualty
insurance and the health segment. Particularly the
sale of the Karlsruher Insurance Group, whose business
focused on life insurance, made itself felt in life premiums.
The very satisfactory development in the health segment,
where gross premiums rose by 4.3%, was driven mainly by
extensive new business in supplementary health insurance,
where we recorded growth of 15.6%. Claims experience
in property-casualty insurance, including legal
expenses insurance, was again very favourable in the
year under review. This enabled us to achieve a combined
ratio that was considerably better than our target of 95%.
For the reporting on individual fields of business, the following principle
applies: volumes and results that derive from business within a segment
are eliminated, whereas figures that derive from business with companies
from other segments (e.g. intra-Group reinsurance cessions from
primary insurers to reinsurers) are included in the data. Where the information
relates to national accounting law, this is mentioned specifically.
Result
Compared with the previous year, the consolidated result
improved by €785m to an outstanding €3.5bn (2.8bn).
The largest contribution of €2.1bn (0.4bn) came from
the reinsurance property-casualty segment, where we
benefited from our excellent basic business and the near
absence of serious natural catastrophes in 2006.